Chapter 14 - Google in three Parts: Search, Online Advertising, and Beyond
Key Info and Terms
- Advertising drives Google’s profits
o Has grown to earn more annual advertising dollars than any U.S.
- 76% of the search advertising business + AdSense network + DoubleClick =
the firm controls the majority of all online advertising dollars.
- Market capitalization: the value of a firm calculated by multiplying its share
price by the number of shares --- > makes Google the most valuable media
company on the planet.
- Majority of revenue comes from advertising, but the firm is also now engaged
in a “wide-ranging multi-front war” – mobile, browsers, etc.
- Success of existing business = massive cash horde --- > fuels experimentation,
innovation, tolerate failure, acquire aggressively, and patiently build new
- Google uses PageRank to rank relevance of websites
o Google does not accept money for placement of links in search results
o Web pages that have more pages linking to them are ranked higher
- Search engine optimization: the process of improving a page’s organic
- Link fraud: creating a series of bogus web sites that link back to the pages
they’re trying to promote (and making the website appear higher on
- Not searching the entire web, searching a copy of the web that is made by
Google – an index - uses software to uncover as much information as they can
find – spiders, Web crawlers, software robots.
- Can add firewalls, code, or corporate firewalls to keep Google out
- Three factors driving online ad growth trends
o 1. Increased user time online
advertisers are simply following the market
o 2. Improved measurement and accountability
impressions: each time an ad is served to a user for viewing --
- > now companies can track how effective their advertising
instead of guessing. Can see the clicks and the product
purchases or other Web site activity that comes from those
o 3. Targeting
can target consumers based on how they respond to ads
- search engine marketing: the practice of running and optimizing search
engine ad campaigns.
- Google uses mainly text ads – keyword advertising: they’re targeted based
on the words in a user’s search query.
o Show up when a user has a purchasing intent -- > makes the ads much
more effective than standard display ads like those on FB.
o Advertisers only pay for results --- they are pay-per-click / cost-per-
click, where advertisers don’t pay unless someone clicks on their ad. - Google AdWords advertising account – set up in minutes – specify what they
want to pay every time an ad is clicked, what their budget is, and they can
also control other parameters.
- Precise ad ranking formula
o Ad Rank = Maximum CPC x Quality Score
Quality score --- one factor is the click-through rate: the
number of users who clicked an ad divided by the number of
times the ad was delivered.
- Geo-targeting: when computer systems identify a user’s physical location
for the purpose of delivering tailored ads or other content.
o Advertisers can specify that their ads only appear for Web surfers
located in a particular area
- IP address --- > ads in G oogle search are geotargeted
- Proxy servers: a third-party computer that pauses traffic to and from a
specific address without revealing the address of the connected user --- >
- About 30% of Google’s revenues come from running ads on Web sites tha